Back in 2005, a lone Merrill Lynch broker decided he'd had enough. George McReynolds filed a lawsuit against the big brokerage, claiming race discrimination in its treatment of African-American brokers. For the past eight years, McReynolds has sat tight, continuing with his suit even while keeping his job at Merrill -- which, in the interim, became part of Bank of America (NYSE:BAC).

Finally, B of A is settling the case, which originally named only McReynolds but grew to encompass 700 plaintiffs, for $160 million. This is great news for the 1,200 Merrill workers, past and present, who will have access to the settlement kitty. It's also excellent news for Bank of America, which really needs to work on its sullied image. Though the bank still has a long way to go in other areas of public relations, I'm always glad to see it take positive steps -- such as this one.

Bringing Merrill into the fold
Chances are good that Merrill will be fully integrated into Bank of America by the end of the year, which may have prompted the desire to clear the decks. Even though the suit sometimes seemed like it was going nowhere, McReynolds pressed on, determined to force change at the mostly white brokerage.

When the suit was filed, the ratio of white to black brokers at Merrill was 75 to 1, according to The New York Times. The black employees were held back from fully participating in the company, McReynolds claimed, and often blocked from opportunities afforded their white counterparts. To settle a 1970s-era discrimination suit, Merrill pledged to increase its percentage of black brokers to 6.5% of the workforce, but never did so.

The financial industry still needs to clean up its act
Though racial discrimination suits aren't terribly common at white-male dominated Wall Street firms, Merrill isn't an anomaly. Bank of America was sued last July by a black former employee who alleged similar practices as McReynolds, and Morgan Stanley (NYSE:MS) settled a lawsuit in 2007 for $16 million, in which black and Latino brokers claimed the company discriminated against them in the areas of opportunities and compensation.

In addition, Wells Fargo (NYSE:WFC) was sued by the Equal Employment Opportunity Commission in 2010, on behalf of an African-American employee who claimed the bank denied her promotion due to her race and her age. Wells also paid out a whopping $175 million last year to settle allegations that it discriminated against black and Hispanic mortgage borrowers.

A positive move forward for Bank of America
The settlement should go a long way toward fully integrating Merrill Lynch into the B of A family, and it will help smooth the sometimes bumpy relationship the big bank has had with its Merrill advisors. Many brokers have never felt fully at home  since the Bank of America takeover, but I believe B of A wants that to change.

Putting this distasteful episode in the past will also clear the way for Merrill to hire new, talented brokers of African-American descent who have shied away from the firm because of its discriminatory practices.

Bank of America itself has made great strides in diversifying its work force, for which it was recently recognized by Diversity MBA Magazine. As for McReynolds, he hopes to take a seat on the new committee Merrill pledges to create in order to foster a more welcoming and equitable working environment for African-Americans.

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.